Africa’s Continental Free Trade Area in The Face of Climate Change

Published on 12th November 2019

Africa is upbeat about the creation of a continental bloc meant to improve economic outcomes across the continent by creating a single continental market for goods and services, which will in turn support the growth of intra Africa trade. This means that countries will be seeking to produce more, targeting Africa’s fast-growing population that is presently over 1.2bn strong. This is obviously not a new idea. It is a firm positive step for the second largest continent with vast potential if well executed. It's certainly an exciting time for Africa that is fast turning into an investment haven. This comes at a time when as a result of Brexit, London’s highly coveted global financial capital status hangs in the balance and there is slow growth in the Eurozone and the UK as they grapple with the complexities of Brexit and US-China trade tensions.

It feels like perfect timing for the 54 African states to look inward, harness the trade bloc and leverage on it to play in the global markets. A 2019 series titled ‘Africa’s intra-and extra-regional trade’ by Mariama Sow of the Brookings Institution indicated that trade within Africa ranked low at 18% of total exports compared to regions like intra-Asia at 59% and trade within the Eurozone at 69%. Evidently, Africa is lagging behind but the continental free trade area (CFTA) will see her close this gap. Countries are already working to ramp up production and enhance competitiveness in industry and enterprise. A lot of work is going into vital legal and policy formulation, aligning policies that already exist, scaling and improving value chains, instituting public and private infrastructure projects, addressing barriers to trade and opening up markets. Africa is experiencing the birth pains of this process that will involve numerous conversations, lobbying, concessions, collaborations and real concrete action to deliver CFTA with the grand vision of a customs union. Ultimately, good politics will be crucial for Africa to realise this ambitious project.

As exciting and promising as this journey is for Africa, there is a fight that has taken global center stage, a fight to save the earth from the ravaging effects of climate change. Described as a real existential threat, conversations and actions to counter adverse changes to the earth’s climate system have risen to the top of agenda in global forums, government and corporate boardrooms. Climate change is the greatest concern of our time. Greta Thunberg epitomizes an even younger generation with a vehement outcry for action to be taken before it is too late. In her own words, “This is the biggest crisis humanity has ever faced. This is not something you can like on Facebook.” Twenty five years ago, Bishop Desmond Tutu, former Archbishop and Nobel Peace Prize Winner said that people could be excused for not knowing or doing much about climate change. Today we have no excuse. The financial services industry has equally taken on this challenge as financial institutions craft innovative green finance solutions and green bonds in addition to mainstreaming climate change mitigation actions into their own operations. Central Banks have also come to the table and the 42 member Central Banks and Supervisors Network for Greening the Financial System (NGFS) attests to this effort.

Global warming, the rise in the average temperature of the earth, has led to changes in our climate systems. Scientists say that humans’ contribution to global warming is in activities that result in emission of greenhouse gases; carbon dioxide, methane and nitrous oxide. It follows that the increase in these human activities over many years has resulted in higher emissions leading to a faster rise in temperature over the last century. The effects of this are seen across the globe in expanded deserts, rising sea levels as glaciers melt much faster resulting in increased flooding with coastal areas experiencing the brunt of the flooding, extreme weather conditions evidenced by heatwaves, droughts and extreme rainfall. All these affect livelihoods and lives as well as entire ecosystems and at the basic level, threaten water and food security. As a result, there are efforts at all levels to curb this threat including commitments to reduce greenhouse gas emissions, the highest level of global engagement being the annual United Nations Climate Change Conferences commonly referred to as COP (From COP1 held in 1995 to the upcoming COP25).

Regions and countries are at different stages in this effort, with some having made greater strides towards greener economies than others. Italy has demonstrated how critical this is by introducing mandatory climate change lessons into its education curriculum. Presently, there are increased concerns about the errant destruction of the amazon forest which is vital to the global ecosystem. Some world leaders have been exerting pressure on the government of Brazil to stem destructive activities in the amazon and these efforts are still ongoing. Today’s technological developments are increasingly greener to ensure that we are doing less to harm our environment. For example, clean/renewable energy is increasingly being championed and embraced today. There are big investments in solar, hydroelectric, geothermal and wind energy even on the African continent. Africa having not industrialized as much as the developed west did not need to depend heavily on coal. Therefore, as Africa emerges, it has the opportunity to do so by leveraging improved and new technologies created over the last 5 decades, which means that Africa is able to industrialize with less damage to the environment than it would have 30 years ago.

This basic background gives a picture of the conversation that should shape our CFTA journey. At the heart of it, achieving and benefiting from a continental trading bloc translates into an industrialization drive. If that is the case and it is indeed vital for the continent to industrialize, how this shall be pursued in the face of this very present danger of climate change is pertinent. Africa will need to approach this advertently. We need to structure and create order in our value chains. Ramping up production means increased land use. Does this mean we cut down more forests at a time when we need to be restoring our ecosystems? What does this mean for fragmented production? These are challenges that governments have to work through to ensure that the growth of industry is not at the expense of these vital ecosystems the world is wrestling to conserve.

Mainstreaming climate change mitigation and adaptation strategies into public and private plans and actions is critical. Success is in collaborations. Africa must invest heavily in its own think tanks, developing its R&D spaces. Scientists, Developers, Technologists, Policy experts, Governments must all work together to craft policies, frameworks and technologies that deliver greener economies. As governments create industrial parks, new cities, trade corridors and develop ports, environmental considerations should be at the core and not just at inception but rather a continuous endeavor of monitoring to ensure adherence to set standards. Public-Private-Partnerships shall grow in importance as vehicles for such collaborations. The urgency of this effort requires clarity in message and this is yet to take shape in Africa.

All efforts around ACFTA must be pegged on the climate change conversation. The world’s poorest countries are likely to be the worst affected by the effects of climate change. As such, it cannot be an after-thought. Climate change is still an elitist conversation, which should not be the case as this is not a challenge for a few to fix but rather for the citizenry to rally behind. Household efforts in regard to land use, energy sources and use, agricultural practices will all deliver a concerted effort in this fight. It is important that the threat of climate change be communicated in simple but effective messages.

Africa has an opportunity to mainstream climate change actions and by doing so, demonstrate to the world and to generations after us that economic interests can be pursued responsibly.

By Edgar Azairwe Rutaagi

The author is a Trade Finance Professional Currently working with the Central Bank of Uganda